A new method has been developed to prepare intact cell systems to produce hydrogen peroxide (H2O2) using methylotrophic yeast Pichia pastoris. The high alcohol oxidase (EC 1.1.3.13; AOXase) content in the living P. pastoris cells is always associated with high activity of catalase (about 200- to 400-fold higher than that of AOXase) to protect the cells from oxidative damage from H2O2. To obtain catalase-free intact cells, a combination of a cationic detergent, cetyldimethylbenzyl-ammonium chloride (Cation M2), to permeabilize the cell membrane and a catalase inhibitor, sodium azide, was used to selectively release and inactivate the cellular catalase. This chemical treatment released more than 50% of the cellular protein including the inactivated catalase, thus increasing more than twofold the specific cellular AOXase activity. In addition, the cells were made more permeable to the reacting substrates. Using chemically treated P. pastoris YB4290 cells, 10 mM of H2O2 was produced from 10 mM methanol (Tris-HCl buffer, pH 7.5) in 4 h at 15 degrees C. In the presence of pure oxygen instead of air, 50-80 mM of H2O2 was produced in 3 h at a maximum rate of 2.6 M g(-1) (dry cell wt.) h(-1). The cells maintained half of the initial enzyme activity after five repeated-batch experiments at 15 degrees C.